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ECB’s Visco reiterates renewed action from members for stabilized euro

FXstreet.com (Barcelona) - European Central Bank Governing Council member Ignazio Visco recently urged countries to control their respective debt, acutely aimed at stimulating growth as a complement to monetary policy to stabilize the euro.

“Every country must do its part,” Visco, also governor of the Bank of Italy, said in the text of speech delivered today in Rome at the central bank’s annual meeting. “Monetary policy can guarantee stability only if the area’s economic fundamentals and institutional architecture are consistent with that objective.”

As such, Viscos call for reforms and debt management as the 17-nation single-currency area continues its struggle to bring down unemployment and foster economic growth. Euro instability, which Visco associates with what he calls “redenomination risk,” has been curbed by the ECB’s Outright Monetary Transactions program, announced last year, to purchase debt from countries that request assistance.

“The measures taken, in particular the announcement of the outright monetary transactions, are conducive to the national and European reforms which alone can eradicate redenomination risk,” Visco added. With regards to Italy, some Italian bank shareholders must be ready to dilute stakes and accept mergers, given the tardiness of reforms in the country during this past year.

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